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Deardorff questions the economics of Trump’s border wall and the USMCA

Wednesday, January 16, 2019

The “will they or won’t they” question continues to circulate around who, if anyone, will pay for a border wall between the United States and Mexico. President Trump has attempted to provide some clarity, but each suggestion only appears to add confusion. In the January 10, 2019, article for USA Today titled “Fact check: Trump says he 'obviously' never said Mexico would pay directly for the wall. But he did,” reporter William Cummings turned to experts like Professor Alan Deardorff for clarity.

The story summarizes the many conflicting statements the Trump Administration has given over this issue. From claiming outright that Mexico would contribute the money directly, to the most recent assertion that they would pay retroactively via the money the U.S. would potentially save if the United States-Mexico-Canada Agreement, or USMCA, is ratified. But experts disagree. "I don’t see any way that it actually brings in money to our government,” critiqued Professor Deardorff. Deardorff explained that the USMCA is nothing new when compared to its predecessor, The North American Free Trade Agreement, or NAFTA, stating that "in economic terms, the new deal is not, in fact, better than the old one, but it may (only may) benefit U.S. workers to a small extent.”

How this will end is speculative, but taking the opinions of experts seriously, one thing is clear: economists firmly dispel any declaration that interest or fees gained by the USMCA to the U.S. will be sufficient to supplement payment for a border wall.

Alan Deardorff is the John W. Sweetland Professor of International Economics and Professor of Public Policy. With Bob Stern, he has developed the Michigan Model of World Production and Trade, which is used to estimate the effects of trade agreements. He has served as a consultant to the U.S. Departments of Commerce, Labor, State, and Treasury and to international organizations including the Organization for Economic Cooperation and Development and the World Bank.